30-Aug-2013 7:01 AM

WestJet announces intent to purchase 65 737 MAX aircraft

WestJet announced (29-Aug-2013) it has entered into a LoI to purchase 65 Boeing 737 MAX aircraft from Boeing, consisting of 40 737 MAX 8 and 25 737 MAX 7 aircraft, with delivery scheduled to begin in Sep-2017. The 737 MAX aircraft will be equipped with CFM International LEAP-1B engines. Boeing currently has firm orders from five other airlines in North America for its 737 MAX aircraft. The airline will substitute 15 of its existing 737NG aircraft orders currently scheduled to deliver between Dec-2014 and 2018, with 737 MAX aircraft, for a net increase of 50 committed deliveries to its fleet plan. Including this pending order, WestJet's future 737 aircraft deliveries total 92, with commitments for the proposed 737 MAX 7 and MAX 8 aircraft, including substitution rights to the 737 MAX 9, scheduled for delivery from 2017 through 2027. WestJet notes that as a result of the flexibility built into its fleet plan, which includes its lease renewal options but excludes any potential sales other than the previously announced sale of 10 737NG aircraft in 2014 and 2015, the fleet could be as large as 162 737 aircraft or as few as 120 737 aircraft a decade from now. The carrier also noted that as a result of this pending order, "WestJet now anticipates its capital expenditures to range between $210 million and $220 million for the third quarter of 2013, and between $690 million and $710 million for the full-year 2013. Previously, WestJet's guidance was between $100 million and $110 million for the third quarter of 2013, and between $610 million and $630 million for the full-year 2013". The increase in full-year 2013 capital expenditure incorporates reduced deposits forecasted in 4Q2013 as a result of the 737 aircraft substitutions. Including this pending order, WestJet's cumulative aircraft capital expenditures from 2014 to 2017 will be lower than previously expected due to the substitution of 15 existing 737 aircraft orders that were scheduled to deliver between Dec-2014 and 2018 to 737 MAX aircraft delivering in 2017 and beyond. WestJet expects that a definitive purchase agreement will be entered into prior to 30-Sep-2013. WestJet's current fleet consists of 103 737NG, and four Bombardier Q400 aircraft. WestJet president and CEO Gregg Saretsky said: "We are proud to continue our long-standing relationship with Boeing and are thrilled that we will be among the first North American airlines to fly the new 737 MAX in its first year of commercial operation. This pending order reinforces our strategy of maintaining the flexibility in our fleet plan while enabling us to introduce new fuel-efficient technology and enhance our inflight guest experience. Our strong balance sheet allows us the opportunity to support our low-cost business model and contribute to our profitable growth through the renewal of our fleet with a lower operating cost aircraft." [more - original PR - WestJet] [more - original PR - CFM International] [more - original PR - Boeing]

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